The economy is at full employment

Assignment Help Macroeconomics
Reference no: EM13830605

Assume that the economy is at full employment, interest rate is 4%, and money supply is $1,000. Suppose economy is experiencing a sudden rise in crude oil prices. A. Use the AS/AD model to show the impact of this event on equilibrium GDP and equilibrium prices in the economy. B. The Fed is committed to combating the threat of potential inflation. Will the Fed use restrictive (tight) or expansionary (easy) monetary policy? Suggest a monetary policy tool that the Fed can use to achieve this goal. Use a money market diagram to show the impact of this policy on equilibrium interest rates and money stock. C. If the Fed uses the tool as you suggested in part B, what will be the impact on equilibrium price level and real output? Use the AS/AD diagram of part A to illustrate your answer. 

Reference no: EM13830605

Questions Cloud

About accounting terminology : Accounting Terminology
What did you learn about each author portrayal of jesus : What did you learn about each author's portrayal of Jesus from comparing and contrasting the three gospel accounts? How would you summarize each author's portrayal of Jesus based upon your study of these two stories
Along a production possibilities frontier for real gdp : Along a production possibilities frontier for real GDP and the quantity of leisure time, as leisure time increases, real GDP:?? A. decreases.? B. increases.? C. stays the same. D. could increase, decrease or stay the same.?
How flesh colored bandaids are a miss as it relates to power : Explain how flesh colored band-aids are a "miss" as it relates to ethnic purchasing power for corporations who sell this type of product. By making a change to offer a more diverse line of flesh colored band-aids what message would this send to co..
The economy is at full employment : Assume that the economy is at full employment, interest rate is 4%, and money supply is $1,000. Suppose economy is experiencing a sudden rise in crude oil prices. A. Use the AS/AD model to show the impact of this event on equilibrium GDP and equilibr..
What were the two philosophical traditions christians found : What is "Eschatological hope"? How does understanding ancient Jewish eschatology lead to understanding the life, teachings, death, and resurrection of Jesus? What were the two philosophical traditions Christians found "attractive and helpful"? Explai..
Capital investment process deficiencies : Capital investment process deficiencies
How much would the us pay the french company : How much would the U.S. pay the French company? Since there is a huge difference, what are the tactics they played to justify their claims? What dramatically changed the whole situation so the U.S. won the negotiation
Collection of popular erp system : Dynamics is a collection of popular ERP system used by many organizations. Dynamics offer five primary products, each includes one or more model.

Reviews

Write a Review

Macroeconomics Questions & Answers

  What is the price elasticity of demandis it elastic

If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand?is it elastic, inelastic or unitary elastic?

  Calculate real earnings for construction workers

In 1982 to 1984 the base period used for the customer price index, the average earnings of construction workers were $442.74 a week.

  Discuss how rapid inflation can undermine moneys ability

Discuss how rapid inflation can undermine money's ability to perform each of the three functions.

  Find estimated percentage point change in rdintens

The variable rdintens is expenditures on research and development (R&D) as a percentage of sales. Sales are measured in millions of dollars. The variable profmarg is profits as a percentage of sales. Using the data in RDCHEM.RAW for 32 firms in the..

  What nominal annual interest rate is being paid

Your cousin has just bought a used car for $6000.He is to pay for it as follows.A $2,000 down payment and 24 end of month payments of $177.28.What nominal annual interest rate is being paid?What is the actual interest rate?

  Find the steady state value

In both countries, g=0.02 and δ=0.04. Find the steady state value of y for each country.

  Describe how antipoverty programs can discourage the poor

Describe how antipoverty programs can discourage the poor from working. How might you reduce this disincentive? What re the disadvantages with your proposed policy?

  Discuss the role of macroeconomic policy

Discuss the role of macroeconomic policy in reducing unemployment and inflation. In your discussion make use of the diagrammatic representation of the macroeconomy

  Suppose the elasticity of us exports is very low

Suppose the elasticity of U.S. exports with respect to the real exchange rate is very low

  Select nation from the index and bring in additional source

Select a nation from the Index and bring in additional source material to explain its ranking and how it has changed over the last 5-10 years.

  You are the chairperson of the federal reserve the date is

you are the chairperson of the federal reserve the date is june 2009 and a recession is ahead. using the monetary tools

  Why do necessities tend to have demand that price inelastic

what distinguishes public good from private goods what happens to total revenue given a price increase and demand is inelastic Why What is the difference b/w economic and accounting profit Why is a difference b/w them important

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd